28 October 2016

Freeing crude oil exports yields benefits

Options Magazine Winter 2016: IIASA researchers investigate the impacts of the US lifting its crude oil export ban . 

© WildEarth Guardians | Flickr

© WildEarth Guardians | Flickr

In early 2016, the USA lifted its crude oil export ban—a restraint that had been in place for more than four decades.

The recent US shale oil boom eventually culminated in a removal of the ban and, to investigate whether this was a beneficial decision for the country, IIASA researchers modeled two separate scenarios: one projection with the ban remaining in place, and one where the USA was free to export crude oil.

The IIASA research embeds the structure of the US crude oil market in the global trade network and compares production levels, strategic investments, and the difference in price between crude oil and the refined product between the two scenarios. The researchers also analyzed the differences in imports and exports in the USA and investments and adaptations by producers, refiners, and consumers across the world.

The study found a significant expansion of the US sweet crude exports—a type of crude oil low in low sulfur. This was to the benefit of domestic producers who can sell their crude oil at global market prices. The global markets will also gain from the lift of the ban as countries who previously had to refine heavy (denser) crude oil can replace some of this with sweet crude imports.

“Ending the ban allows for a more efficient utilization of refineries, gives rise to a more beneficial trade of different crude and product types, and removes a significant distortion of the global oil market in past decades,” says IIASA researcher Daniel Huppmann.

Text by Jane Palmer


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Last edited: 30 August 2017

CONTACT DETAILS

Daniel Huppmann

Research Scholar

Energy

T +43(0) 2236 807 572

PUBLICATIONS

Langer L, Huppmann D, & Holz F (2016). Lifting the US crude oil export ban: A numerical partial equilibrium analysis. Energy Policy 97: 258-266. DOI:10.1016/j.enpol.2016.07.040.

International Institute for Applied Systems Analysis (IIASA)
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